Brazil OKs Disney’s purchase of Fox assets, paving way for deal to close

By Meg James

Published
4:35 pm PST, Wednesday, February 27, 2019

Walt Disney Co. has cleared one of the last major hurdles in its quest to buy much of 21st Century Fox.

After a proceeding Wednesday, Brazil’s antitrust regulator, Cade, approved Disney’s $71.3 billion deal after Disney agreed to sell a sports channel in Brazil. The South American government’s conditional approval of the deal moves the Burbank company significantly closer to gobbling up Fox’s prolific production studios and channels — a process that could be completed next week.

Disney’s takeover of Fox is expected to transform not only Disney but also the entire entertainment industry.

The Disney-Fox combination would create an entertainment titan of unprecedented scope and reach. It will help realize the vision of Disney CEO Bob Iger, who began scooping up valuable entertainment brands more than a decade ago to build a company rich in content — and audience appeal.

To win the Brazilian government’s approval, Disney agreed to sell the Fox Sports channel in Brazil. Part of the appeal of the Fox transaction was expanding Disney’s international presence.

Forcing Disney to give up that channel was important to Brazilian regulators because Fox Sports maintains the rights to popular South American soccer competitions. Disney already owns an ESPN Brazil channel, which it started nearly 30 years ago. Brazilian officials were worried that Disney would have too much control in the TV sports market if it owned the two popular channels.

“Currently, there is only one big-screen rival capable of competing with these channels,” Cade said in a statement in Portuguese. The divestiture of Fox Sports in Brazil is designed to “eliminate competitive concerns in the pay TV sports channel market.”

Disney also plans to relinquish the Fox Sports channel in Mexico, according to Bloomberg News.

Because Disney owns the majority of ESPN, the U.S. Justice Department said it would not be allowed to own Fox’s 22 regional sports channels, so those cable channels are being auctioned off.

European regulators in November asked Disney to sell its 50 percent stake in the A&E Networks, which include the Lifetime and History channels. (Disney is keeping its A&E stake in the U.S.)

Disney petitioned the Brazilian agency for approval in July, but the process slowed. Cade meets only once a month to consider such transactions — so Disney was eager to get the approval this week.